The domestic automobile industry got a boost this week after General Motors and the United Auto Workers union struck a new deal. Among other provisions, the deal created nearly 6,400 new jobs and raised entry-level pay for UAW-GM employees.
Provisions from the GM-UAW deal affected a number of GM factories across the nation. The UAW will allow GM to permanently close down a plant in Shreveport, La., which manufactured Hummers and other trucks. The plant had been idle—shuttered, but not completely closed until a new car model is available for production—since 2010 when GM discontinued the Hummer line.
The deal kept a plant that manufactured SUVs open in Janesville, Wis. A new plant will open in Spring Hill, Tenn. to begin building two midsized vehicles–likely the Chevrolet Equinox and GMC Terrain–whose production was slated to take place in Mexico. In addition, GM will hire more employees and add work hours to five factories that produce parts for GM vehicles–three in Michigan, one in Indiana, and one in Missouri.
“Anything that adds jobs domestically in this economy is definitely a plus,” said senior Phil Baldwin, who drives a Chevrolet Trailblazer manufactured by GM. “It’s obvious that carmakers in the U.S. like GM and Ford are struggling, so pulling some jobs back home might help,” he added. “It’s nice to know there won’t be a strike or anything like that. I can rest easy now knowing if I need parts or a repair I’ll be able to get them.”
Although both GM and UAW both stand to benefit from the new contract, its domestic rivals and the overall financial market stand to gain even more from the deal. Ford and Chrysler have yet to negotiate new deals with the UAW, but based on the provisions GM and UAW conceded to one another, these two companies stand to make better deals than GM did.
As a result of this new contract and financial improvements since its bailout in 2008, Moody’s Investors Service is considering upgrading GM’s credit ratings, which would be one of the biggest steps for the domestic automaker to rebound to a pre-bailout state.